Amid a wave of food and beverage companies going public, Vita Coco parent All Market Inc. is the latest to receive buzz about a potential IPO. Earlier this month, Bloomberg reported that the company is potentially planning to list shares as early as the third quarter with a potential valuation of more than $2 billion.
Reached by BevNET, All Market CEO Mike Kirban declined to comment “on speculation.” Sources close to the company however confirm that an IPO is indeed receiving serious discussion.
Why Go Public?
Over the 17 years since its founding in 2004, All Market has had opportunities for an exit. PepsiCo was reportedly interested in acquiring the brand in 2017, with several media accounts stating Vita Coco sought $1 billion in the transaction.
In 2014, the Beijing-based firm Reignwood Group, the parent company of Red Bull China, purchased a 25% stake in All Market for an undisclosed sum with the intent of distributing the brand in China. Other Vita Coco investors include Belgian family-owned firm Verlinvest, L.A.-based Strand Equity, and CAVU Ventures co-founder Rohan Oza. Celebrity investors Matthew McConaughey, Madonna and Demi Moore also have equity stakes in the company.
According to Nick McCoy, managing director and co-founder of Whipstitch Capital, going public is a path to liquidity for Vita Coco. The current M&A market, he said, is likely unfavorable to All Market — particularly if it is in fact seeking at least $1 billion (and at a potential $2 billion valuation in the public market, why wouldn’t they?). While the company is certainly sizable enough to be an acquisition target for beverage strategics, options are limited based on how potential buyers like Coke, PepsiCo and KDP are currently approaching M&A, McCoy said.
The public market, on the other hand, is lighting up for wellness-focused food and beverage companies.
“It’s a great window to get in,” McCoy said. “They will not be able to get a lot of liquidity right away. They’ll get some through an IPO, but it’ll take a while for all the existing shares to trade, at least a couple years.”
Mark Rampolla, managing partner of PowerPlant Partners and also the founder of longtime Vita Coco rival Zico, said he sees the rise of plant-based food and beverages going public as the result of a growing appetite for better-for-you and better-for-the-planet products among not just the general public but Wall Street traders. Rampolla pointed to Beyond Meat’s IPO in 2019 as the beginning of the trend (Beyond Meat is a PowerPlant portfolio brand) and has since been followed by companies such as Laird Superfood and Oatly.
“There is an appetite among the public market investors who don’t have exposure to the reality of the transformation going on within the food system,” he said. “And, broadly speaking, there’s limited opportunities [currently on the public market] to express what they define as ‘ESG’ — environmental, sustainability and governance, what we would just call health and wellness. Beyond Meat was one of the first examples, but Oatly was certainly a big one and bodes well for beverages.”
ESG has been a key term among better-for-you brands going public in the past few months, and All Market would be likely to make health and sustainability key parts of its messaging for a public offering. Sugar-free soda maker Zevia, which filed for an IPO with the U.S. Securities and Exchange Commission (SEC) on Friday, highlighted its B Corp certification and emphasis on improving public health and environmental sustainability. Oatly likewise made “sustainability” a key theme of its IPO; its F-1 filing highlighted the reduced environmental impacts of oats compared to dairy and also cited a Zeno Group report that showed 92% of Gen Z and 90% of millennial consumers “would act in support of a purposeful brand.”
The search for better-for-you brands with the opportunity to go public has also partly fueled a wave of special purpose acquisition companies (SPACs) that launched over the past year. Among SPACs targeting the food and beverage industry are Capstar Partners, co-sponsored by CAVU co-founder Clayton Christopher; Siddhi Acquisition Corp., formed by Siddhi Capital; and AF Acquisitions, founded by investment firm AF Ventures.
Rampolla, however, warned that the race to find the next Beyond Meat does have its pitfalls. Many of the companies now filing or considering IPOs are more than a decade old and brands attempting to go public too early might not be ready.
“I think with a lot of these SPACs and really low revenue companies, maybe they last and maybe they don’t,” he said. “Beyond Meat is a real company, Oatly’s a real company and Vita Coco is a real company. So I think if entrepreneurs and investors and teams are willing to build for the long term and build real businesses, there’s a new avenue for outcomes.”
How is Vita Coco performing?
An internal Vita Coco sales deck viewed by BevNET showed the brand as the clear leader of the U.S. coconut water category.
According to the deck, Vita Coco dollar sales were up 37% in the 13-week period ending June 6, compared to 21.8% growth for the overall coconut water category. Within the period, the brand reported $17.3 million in sales, placing ahead of Goya ($15.2M), Harmless Harvest ($10.7M) and C2O ($8.7M).
Citing IRI data, the deck reported 20.7% dollar sales growth in total MULO plus convenience for the 52-week period ending June 6 for the Vita Coco brand. Broken down by channel, dollar sales were up 29.2% in mass, 33.6% in club, and 5.3% in convenience, but were down 62% in drug (however, data for the last 13 weeks showed sales recovering up 48.8%).
Roughly 54% of the coconut water category’s growth has come from consumer shift, pulling largely from the bottled water and juice categories, the company deck showed, while 43% of the growth is due to increased sales from existing shoppers.
According to IRI data for the 52-week period ending June 13, Vita Coco’s core line reported 10.3% growth to $159.3 million in MULO plus convenience. The brand’s Pressed line was up 39% to $23.8 million. Fruit flavored Vita Coco products rose 44.7% to $23.9 million and fruit flavored Pressed products were up 133.1% to $9.8 million.
McCoy said that if Vita Coco does opt to go public, the company will need to sell investors on its growth narrative. That could be tough for a 17-year-old company playing primarily in a category that had been stagnant for several years, but he said recent data does show that Vita Coco is leading a revitalization for coconut water. Citing SPINS data, he noted that Vita Coco accounted for roughly 70% of the growth in coconut water.
“These guys have all of a sudden found themselves in a category that has gone from being flat for the last year or two to going upwards rapidly,” McCoy said. “You’ve got a category that is now suddenly growing and there’s a clear leader. That could be a big enough story.”
While the Vita Coco brand remains strong, sales growth has not been nearly as rapid for All Market’s other portfolio brands: Runa and Ever & Ever. McCoy noted “there’s no growth story” in Runa, citing flat numbers, but added that he believes the brand “has a lot of potential” with its strong flavor and plant-based credentials.
While Reignwood Group originally purchased a minority stake in Vita Coco with the intent of building a presence in China, the state of the brand’s international business is unclear. The firm has also faced challenges to its core Red Bull business in recent years. In 2018, Reignwood’s partnership with Thailand-based TCP Group — which owns the global rights to the Red Bull brand and trademark — expired, but retained control of the business following a series of lawsuits. Last year, TCP Group announced it would invest $150 million in Reignwood over three years to rebuild the Chinese Red Bull business. Reignwood also controls Chinese operations for Capri-Sun and VOSS.
Last year, The Coca-Cola Company discontinued Zico, the longstanding number two brand in the coconut water category. The brand was later purchased by PowerPlant Partners and relaunched earlier this year. However, according to McCoy, the brand’s sales have almost totally dropped off and it is now rebuilding.
Rampolla said Zico’s relaunch is on pace but will be a “slow, methodical build” to restore the brand to past heights. However, if All Market were to go public it could have a legitimizing effect on the coconut water category.
“It sort of emphasizes that the opportunity is real,” Rampolla said. “I think there’s demand among consumers and retailers and certainly investors. So we think it bodes very well for Zico and we’re excited to get back in the ring and compete and it’s nice to know that this is going to bring some excitement and capital and energy to the category, which is what I think is needed.”